Liberal think tank offers deficit plan, pushes Obama on taxes

Reuters Staff

3 Min Read

WASHINGTON (Reuters) - A think tank with ties to the Obama administration laid out a deficit-reduction proposal on Tuesday, urging the president to go bold and seek more concessions from Republicans on tax hikes.

The plan emerges as the White House and Republicans remain at loggerheads over averting some $600 billion in tax hikes and federal spending cuts set to start taking effect early in 2013 known as the "fiscal cliff."

The $4.1 trillion deficit-cutting plan from the Center for American Progress seeks $1.8 trillion in new revenue, compared with Obama's call to raise $1.6 trillion.

It also calls for a 28 percent tax on capital gains income for high earners, whereas Obama has called for about a 24 percent tax rate, including new taxes from the healthcare overhaul.

Further, the proposal calls for taxing income from the wealthiest Americans at 39.6 percent, the default rate if the parties deadlock on a budget deal.

The think tank was founded by Democratic strategist John Podesta, a former chief of staff to President Bill Clinton. Its current president is Neera Tanden, Obama's top domestic policy adviser during his first campaign and a healthcare adviser during his first term.

Other Democratic luminaries who signed onto the Center for American Progress paper include former Treasury Secretary Larry Summers, who was an economic adviser to Obama during his first term, and Bill Daley, who served as Obama's chief of staff. Roger Altman, a Clinton-era deputy treasury secretary and co-founder of investment firm Evercore Partners, also signed on.

It is unclear what sort of impact the proposal will have on the tense negotiations. It is certain to fall flat with Republicans, who have called Obama's first offer an insult.

Republicans on Monday put their first bid on paper, calling for $800 billion in new revenue through a revamp of the tax code - but sticking to their pledge not to touch tax rates.

The Center for American Progress plan calls for replacing current standard exemptions and deductions with a "standard credit," and turning popular tax deductions into tax credits that would be limited.